North American Health Care to Pay $28.5 Million to Settle Claims for Medically Unnecessary Rehabilitation Therapy Services

Chairman of the Board and Senior Vice President of Reimbursement Analysis to Pay an Additional $1.5 Million

North American Health Care to Pay $28.5 Million to Settle Claims for Medically Unnecessary Rehabilitation Therapy Services
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September 21, 2016

North American Health Care (NAHC), its chairman of the board, John Sorenson, and its senior vice president of Reimbursement Analysis, Margaret Gelvezon, have agreed to pay a total of $30 million to resolve allegations that they violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary rehabilitation therapy services provided to residents at NAHC's skilled nursing facilities (SNFs), the U.S. Department of Justice (USDOJ) announced.

Under the settlement agreement, NAHC has agreed to pay $28.5 million. On top of that, Mr. Sorensen has agreed to pay $1 million and Ms. Gelvezon has agreed to pay $500,000.

"Medicare patients and those insured by TRICARE are entitled to receive care necessary for their clinical needs and not the financial needs of their health providers," said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division.

NAHC is a private, for-profit company that has service agreements to operate 35 SNFs, most of them in California. The SNFs provide inpatient rehabilitation services—including physical, occupational, and speech therapy—to patients. The United States contends that NAHC caused false claims to be submitted to Medicare and TRICARE, seeking payment for medically unnecessary rehabilitation therapy services provided to residents at the NAHC facilities.

The USDOJ further contends that Gelvezon, in her capacity as an officer of NAHC, contributed to this conduct by creating the improper billing scheme. The government also puts forth that Sorensen, in his capacity as chairman of the board of NAHC, reinforced this scheme at the NAHC facilities. The USDOJ says that this conduct occurred from January 21, 2005 to October 31, 2009 (for all the NAHC SNFs) and continued from November 1, 2009 to December 3, 2011 (for three of the SNFs in the Northern District of California area).

"This office is committed to safeguarding the federal health care programs and the patients who are enrolled in them," said U.S. Attorney Brian J. Stretch for the Northern District of California. "Skilled nursing facilities such as NAHC treat some of the most vulnerable patients in the health care system. These facilities, and the individuals who run them, will be held accountable when they provide treatment based on financial motivations instead of the patients' needs."

The USDOJ says that this settlement illustrates the government's emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $30.6 billion through False Claims Act cases, with more than $18.5 billion of that amount recovered in cases involving fraud against federal health care programs.

The Department stresses that claims resolved by the settlements are allegations only and there has been no determination of liability.